And On Second Thought, Maybe Starbucks Shouldn't Be In The Music Business

from the core-competencies dept

We've chronicled Starbucks' successes and failures as it tiptoed into the music industry over the past few years. The ubiquitous coffee shop was trying to position itself as a "lifestyle" brand. After successes in selling the albums it regularly played in stores, the company went so far as to set up its own record label. While we noted that this was an interesting play, it seemed like it would really only work if the the company didn't try to become a normal record label. Unfortunately, it seems like that's exactly what it did. It focused on selling albums, rather than the wider musical experience, and pretty much relied on the Starbucks connection to boost sales. That just wasn't going to cut it -- so it should come as little surprise that the suddenly struggling company is handing over the record label to someone else to deal with. Starbucks will continue to look for music to sell in its stores -- it just won't be producing albums anymore. This makes plenty of sense since Starbucks never really seemed to have much of a plan to do anything really innovative in the music business, and right now it probably has a lot more important things to concentrate on.

Reader Comments

Seriously, if I'm going to pay $2-3 for a coffee, I have this idea they should actually put the cream and sugar in for me, instead of making me pry off the lid they insist on putting on it (even when I ask them not to), which means I burn my hands, and then I have to rip open like 8 packets of sugar.

Seriously, Starbucks has cultivated this wicked high-brow image, but at a Dunkin Donuts I actually get something resembling service. Go figure.

I also hate how Starbucks tastes except for the dessert coffees, but that's not the point, that's just a matter of taste, obviously. If you like the way it tastes better fine. But I can't escape the notion I'm paying more for less, there.

Starbucks has lost sight of what they do best.

Starbucks has lost sight of what they do best.
make good coffee.

Starbucks coffee is expensive because it is good but with that success comes the inevitable foray into other non-expert areas. In trying to prop up questionable ancillary businesses like music, books, internet; they lost sight of what they do well, make good coffee.

Linux Penguin Philosophy: do one thing and do it well.
as Mufasa says: Remember who you are.

Starbucks Who?

I live in the Seattle area. I have not had a Starbuck's since I moved here, drinking a cup of Chevron coffee in the morning and the stuff at work. Yes, I like good coffee, but I am not going to pay for their stuff, as it is overbrewed. When I want gourmet coffee I buy beans from a small roaster in Alaska and grind and brew it myself and it tastes better than anything they make.

Re: Starbucks Who?

Re: Starbucks has lost sight of what they do best.

"Making good coffee" has never been what Starbucks has been about. They realized from the start that people care more about the atmosphere of a cafe than the quality of the coffee, and what Starbucks has always done best is atmosphere. Only later on, after they were hugely successful and people began looking for reasons to dislike them, did they bother to start improving their coffee. The music and everything else all ties into their image, which is what is most important to them, because it's what made them so obscenely rich in the first place.

"Starbucks sucks. People who frequent Starbucks are sheep with a drug problem. There are lots of sheep, apparently."

I completely agree with this! Coffe is an adicting drug and just because it makes people unhappy in different ways from the drugs we normaly think of it is ok. All these stupid cofee adicts piss me off. It only makes u think you are more awake, but you are actualy you are more likely to try something that you wouldnt do if you were half asleep which leads to people doing mindless dumb things. It makes people anxious, AND I have to wait for them to run into starbucks evry few hours while they get thier cofee.

I could keep going on like this, but I should stop ranting. I just hope they make cofee illegal.

Music?

I like the way an article about Starbucks' music business has turned into yet another bitch thread about their coffee. That's not what we're talking about here and besides their coffee is not exactly an unknown quantity. Everyone's gone there and knows if they like it or not (@Matt Bennett: if you really hate it that much, why the hell do you go there? Stick to DD if you prefer it.).

As for the record label, it's not surprising. They had some good signings (although the others are rather middle-of-the-road for my tastes, I did buy the Sia album from eMusic), but didn't really seem to leverage the market in any way other than store displays. This move should allow the label to reach out while Starbucks get their coffee and stores back on track.

It's called strategy, and no one gives a f#ck...

What's interesting is how many companies completely ignore strategy. A clear strategic analysis would've said that since music is integral to their experience, they shouldn't define their music choices but leave it open so that they could provide the best available regardless of source (as MM points out). But clearly someone in the organization wanted to do the label thing and somehow convinced everyone else it was a good idea. Maybe the reason why strategy is so thoroughly ignored in companies is because most executives don't really know what strategy is. It took me awhile to learn what it was and when I did, I realized that most people have the wrong idea. This might be due to the fact that many execs get their for reasons other than strategy (good salesperson, marketer, etc...). Regardless, 10 minutes of thought on this one would've revealed the answer.

The biggest mistake was commoditizing the "Starbucks Experience" in consumer's minds.

This in itself, was very simple and easy to do-- They sold Starbucks Coffee alongside Duncan Donuts Coffee in the grocery isle. Unfortunately this "availability" can have a trickle-down effect in a customer's mind when they choose a physical storefront too.

If Starbucks is that "3rd Place" and an "Experience Brand", it needs to differentiate from competitors and, well, comparing apples-to-apples in the coffee isle can be a starting point to a customer. I wonder if just the simple "availability" is making the "experience" more expensive in the customer's mind, and they opt for other "experiences".

Maybe Starbucks can change the brand of beans they sell to a neutral 3rd brand name or something. But find a way to differentiate "Starbucks expereince" from the product.